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                                                                    EXHIBIT 10.4

                             STOCK OPTION AGREEMENT

     STOCK OPTION AGREEMENT dated September 20, 2005 between MACKINAC FINANCIAL
CORPORATION (the "Company") and WALTER J. ASPATORE (the "Optionee").

                                    RECITALS:

     A. Optionee is a currently serving non-employee director of the Company and
the Company has determined that Optionee's continued service on the Board of
Directors can have a significant effect on the future success of the Company.

     B. The Company has determined to awarded Optionee options to purchase from
the Company Ten Thousand (10,000) shares of the Company's Common Stock (the
"Option Shares") at a purchase price per share equal to equal to 100% of the
Fair Market Value (as defined in the Plan) of each such share, which the parties
agree to be Eleven Dollars 50/100 dollars ($11.50) (the "Exercise Price"). Such
options are to be issued under and in accordance with the terms and conditions
of the Company's 2000 Stock Incentive Plan (the "Plan") and this Agreement.

     C. The Directors of the Company have approved the award to Optionee of the
options to purchase the Option Shares in accordance with the Plan and this
Agreement.

     IT IS HEREBY AGREED AS FOLLOWS:

     1. Grant of Option: Effectiveness. Subject to the terms of the Plan and
this Agreement, the Company hereby grants and awards to Optionee the right and
option to purchase all or any of the Option Shares upon payment to the Company
of the Exercise Price per share as hereinafter provided.

     2. Vesting, (a) The right and option to purchase 20% of the Option Shares
shall vest and be exercisable beginning on the day following the Closing under
the Stock Purchase Agreement and continuing through the balance of the Option
Term (as hereinafter defined). The options for the remaining 80% of the Option
Shares shall vest and be exercisable in increments as provided below as and when
the Ten Day Trading Price (as hereinafter defined) for the Company's Common
Stock shall equal or exceed one or more of the Target Prices during the Pricing
Periods specified below:

<TABLE>
<CAPTION>
                                                   PERCENT OF OPTION
     TARGET PRICE            PRICING PERIOD          SHARES VESTING
     ------------            --------------        -----------------
<S>                     <C>                        <C>
Exercise Price x 1.15   During the Option Term             27%

Exercise Price x 1.30   After the first year of            27%
                            the Option Term

Exercise Price x 1.45   After the second year of           26%
                             the Option Term
</TABLE>

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For purposes of this Agreement, the "Ten Day Trading Price" shall mean the
closing price for the Company's Common Stock on the Nasdaq Small Cap market for
any 10 consecutive days on which the Nasdaq market system is open and available
for trading. For purposes of making the foregoing determination, if for any
reason no shares of the Company's Common Stock are traded on any day that the
Nasdaq market is open and available for trading, the closing price for such date
shall be the closing price on the first preceding day on which shares of the
Company's Common Stock were traded.

(b) Notwithstanding the foregoing vesting schedule, but subject to the terms of
Section 3, all unvested options for Option Shares shall vest and become
immediately exercisable upon: (i) termination of the Employment Agreement by the
Company for any reason other than Cause (as defined in the Employment
Agreement); (ii) Optionee's Retirement (as defined in the Plan), or early
retirement or resignation with the consent of the Company as contemplated by
Section 10(a) and (b) of the Plan; (iii) the death or disability of the
Optionee: or (iv) a Change of Control (as defined in the Plan) of the Company.

     3. Option Period. Subject to the terms of this Agreement (including Section
2), the options may be exercised and Option Shares may be purchased at any time
and from time to time beginning on the first day after the date hereof and
ending on and prior to the tenth anniversary of the date hereof (the "Option
Term"), subject to the following:

          (a) Except as otherwise provided in this Section 3, in the event
Optionee ceases to remain in Service while this option is outstanding, the
options then vested shall remain exercisable until the earlier of (i) the last
day of the 36th month after the month Service is terminated, or (ii) the
expiration of the Option Period; and

          (b) Any vested and unexercised options shall expire at the time the
Optionee's Service is terminated for Misconduct.

          (c) Except for early retirement or resignation with the consent of the
Company as contemplated by Section 10(a) and (b) of the Plan, any unexercised
options shall expire at the time Optionee's Service is voluntarily terminated by
the Optionee.

          (d) For purposes of this Section 3 and for all other purposes under
this Agreement:

               (1) The Optionee shall be deemed to remain in "Service" for so
     long as he continues to render periodic service to the Company or any
     parent or subsidiary of the Company, whether as an employee or a
     non-employee member of the Board of Directors.

               (2) "Misconduct" means the commission of any act of fraud,
     embezzlement or dishonesty by the Optionee, any unauthorized use or
     disclosure by the Optionee of confidential information or trade secrets of
     the Company or any parent or subsidiary of the Company, or any other
     intentional misconduct by such person adversely affecting the business or
     affairs of the Company or any parent or subsidiary of the Company in a
     material manner. The foregoing definition shall not be deemed to be
     inclusive of all the acts or omissions which the Company or any parent or
     subsidiary of the Company may consider as grounds for the removal or
     discharge of Optionee from Service.


                                        2
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     4. Procedure for Exercise. Subject to conditions of this Agreement, the
options may be exercised at any time and from time to time during the Option
Period by delivering written notice to the Company, signed by Optionee, an
Authorized Transferee, or post-death representative, specifying the number of
Option Shares to be purchased.

     5. Payment of Option Price. The purchase price for the Option Shares shall
be paid in full in cash.

     6. Transferability of Options. Except as otherwise provided in this
Section, the options shall not be sold, pledged, assigned, or transferred in any
way, nor be assignable by operation of law or be subject to execution, levy,
attachment or similar process. Except as provided in this Section, any attempted
sale, pledge, assignment or other transfer contrary to the terms hereof, and any
execution, levy, attachment or similar process, shall be null and void and
without any effect. Notwithstanding the foregoing, the options shall, subject to
the conditions set forth in this Section, be transferable by the Optionee by
gift or other transfer that involves no payment of consideration to the Optionee
to the Optionee's spouse and/or the descendents or to a trust created primarily
for the benefit of the Optionee, the Optionee's spouse and/or the Optionee's
descendents ("Authorized Transferee"). An Authorized Transferee shall have no
right to transfer the options. An Authorized Transferee shall succeed to all
rights and benefits (except the right to further transfer the options) and be
subject to all obligations, conditions and limitations of the Optionee. However,
such rights and benefits (except the rights to further transfer the options) and
obligations, conditions and limitations shall be determined as if the Optionee
continued to hold the options, and the provisions of this Option Agreement
dealing with termination of Service, Retirement, disability and death of an
Optionee continue to refer to the Optionee regardless of whether the options are
or are not transferred to an Authorized Transferee. In order to transfer
options, the Optionee must first give prior written notice to the Company
stating the name, address and tax identification or social security number of
the proposed transferee and the relationship of the proposed transferee to the
Optionee. The option may not be transferred if the transfer would constitute a
violation of any applicable federal or state securities or other law or
regulation.

     7. Conformity with Plan. Except as otherwise provided herein, the options
are subject to all applicable provisions of the Plan which is incorporated
herein by reference. Any matters not addressed herein shall be governed by the
terms of the Plan.

     8. Adjustments. The Company shall make appropriate and proportionate
adjustments to the number of Option Shares and the Exercise Price to reflect any
stock dividend, stock split, or combination of shares, merger, consolidation, or
other change in the capitalization of the Company, as provided in Section 13 of
the Plan. In the event of any such adjustment, all new, substituted, or
additional securities or other property to which Optionee is entitled under the
options shall be included in the term "Option Shares."

     9. Postponement of Delivery of Shares. The Company, in its discretion, may
postpone the issuance or delivery of Option Shares upon any exercise of the
options until completion of any then pending registration of such shares under
the Securities Act of 1933, as amended ("Securities Act"), covering the resale
of such securities by Optionee.


                                       3

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     10. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any Option Shares until the Optionee becomes the
holder of record of such shares.

     11. Further Actions. The parties agree to execute such further instruments
and to take such further actions as may be reasonably be required to carry out
the intent of this Agreement.

     12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to the other party hereto at the address as
such party may designate by written notice to the other party.

     13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer set forth herein, be binding upon and inure to the
benefit of Optionee's personal representatives, successors and permitted
assigns.

     14. Governing Law. This Agreement and all documents contemplated hereby,
and all remedies in connection therewith and all questions or transactions
relating thereto, shall be construed in accordance with and governed by the laws
of the State of Michigan.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                        4

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MACKINAC FINANCIAL CORPORATION


By: /s/ PAUL D. TOBIAS
    ---------------------------------
    Paul D. Tobias
Its: Chairman and Chief Executive
     Officer


OPTIONEE:


/s/ WALTER J. ASPATORE
-------------------------------------
Walter J. Aspatore
Director

DATED: September 20, 2005